While I was finishing my first stint on this bill I believe I was speaking about the Labor Party's opposition to one element of the bill. The bill does a number of things. There are five schedules to the bill. There are a number of component parts to the fifth schedule.
The first four schedules simply streamline the regulatory arrangements that cover tertiary education institutions providing services to overseas students. They do so in a way that is consistent with the additional regulation and oversight that has been put in place for institutions providing services to domestic students. The first four schedules to the bill are seemingly non-controversial, and certainly in the Senate committee government and opposition senators agreed with those four elements. The Greens opposed all, and I commented on the Greens' contribution in my earlier remarks.
There are four component parts to the fifth schedule. The fifth schedule is all about saving money for our higher education sector. We estimate that ultimately it will deliver savings of around $76 million a year if this red tape is reduced, including reducing reporting time frames for student default and allowing overseas students to pay more than 50 per cent of their fees up-front—not requiring them to do so. We have to be careful and keep in mind that that cap will still be in place and that an institution can only require 50 per cent of the fees to be paid up-front, but it will give students the choice. Finally, it will remove some of the arbitrary restrictions on the study period for overseas students. Those elements are agreed to, or seemingly broadly agreed to.
The only matter of contention between the government and the opposition at the moment relates to an issue around what is called the designated account. I will quote from the Labor senators' report on this bill, which defines a designated account. It says:
The designated account requirement was one of a range of measures introduced by the former Labor Government following the Baird Review of 2009. Together these measures have been successful in stemming reputational damage that had the potential to severely undermine Australia’s international education sector.
The designated account requires institutions to put aside or to hold a certain amount of the funding or fees provided to them by overseas students in case there are allegations of fraud or underperformance. It is held almost in trust, if you like, and provides overseas students with that protection.
What the Labor senators' report fails to take into account—in what is only a few paragraphs of analysis, it must be said—is that since 2009 there has been a whole series of regulations and protections put in place, particularly in the domestic student sector. I did wax lyrical earlier about the Australian Skills Quality Authority and the Tertiary Education Quality and Standards Agency. These new bodies have put in place greater restrictions, greater oversight and greater regulation to cover the standards in place for domestic students. This legislation expands those protections and regulations to overseas students. Therefore, after lengthy consultation and review—a review established by the former Labor government before the 2013 election—the government has concluded that these designated accounts are not needed if we were to apply this whole new regulatory structure to our overseas students market.
Again, it is about protection and reducing red tape. Protections will be in place as a result of this legislation, including the expansion of powers for the Tuition Protection Service director, which provides protection for overseas students specifically. We feel that those protections are sufficient and that the existing arrangements introduce an uneven playing field between private and public operators. It is only private institutions providing services to overseas students that must put aside these designated accounts. That of course increases their costs, because they have the cost of keeping working capital aside that could otherwise be deployed in their business. That holding cost increases their cost of running their business and makes them less competitive relative to public institutions that do not need to hold these designated accounts.
These designated accounts do not specifically provide any protection or oversight to overseas students; they are simply a safety net in case something goes wrong. I am firmly of the view that we should absolutely make sure that institutions that are not providing quality services are penalised and are held to account and, indeed, have to make rectification and restitution in the case of students not getting a good deal. But these current arrangements are imperfect because they are imposed on the entire education sector, including those institutions that do the right thing and offer high-quality services. Surely, we would not maintain that a majority of Australian education institutions are doing the wrong thing. But that seems to be some of the insinuation from the other side—that they are all suspect and we must have this overbearing and over-burdensome imposition on these institutions. I do not hold that view. I think we have a very high-quality education sector.
The whole purpose and objective of this legislation is to make sure that the sector maintains its competitive and high-quality services, particularly for the growing Asian region. I do not believe that we should tar the entire sector with a brush saying, 'We must impose these onerous obligations on all of you because we suspect that you might be doing the wrong thing.' I think most of them are doing the right thing. Sure we are always going to have bad apples that we need to root out, but this particular approach and this particular regulation is not the way to do that. The way to do that is to have in place proper accountability mechanisms and proper dispute resolution mechanisms—which this bill strengthens as well. We need to focus on bringing costs down and increasing the competitiveness of our sector, so that we can continue to provide a high-quality education sector and expand the exports that our
education sector provides.
As I said, while we have a very competitive and very attractive higher education sector right now, we must be alive to the challenges, because there are institutions in other countries becoming better and lifting their standards—and, indeed, possibly doing that from an easier perspective, because they are not at the frontier like our institutions are. So we must always strive in that environment to stay one of the best places for overseas students to get a higher education degree.